Singapore Petrochemical Complex (Republic of Singapore)

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  Kaddafi forever (guest)

  By Emma Farge (Reuters) - The deal was struck in early April. Two weeks after the U.N. Security Council vote that saved rebel-held Benghazi from near-certain defeat, Libya's ragtag rebels agreed to the first shipment of oil from the chunk of territory they held. The sale promised to bring in much-needed cash for their bid to set up a parallel Libyan government. If they could pocket just a portion of oil export revenues -- worth around $145 million a day on current prices -- they could also buy the weapons they needed for their fight against Muammar Gaddafi. Bypassing the naval blockade and braving NATO bombs, the Liberian-flagged Equator sailed into the eastern port of Marsa el Hariga in the first week of April. There, it loaded up to one million barrels of the light, sweet crude so prized by refiners before setting sail through the Suez Canal for east Asia. Oil traders believed it would unload in China. It never made it. Since refueling in Singapore on April 28, the Equator has sat anchored off the archipelago. AIS live ship tracking data on Reuters, based on satellite signals sent from the vessel, shows its massive iron hull immersed in 15 meters draft of water -- indicating it was still carrying cargo on May 10. The Equator's final destination is now unclear -- and the subject of much speculation among traders and shipbrokers in an industry with a long history of finding ways around sanctions. What does seem likely, more than a dozen shipping and sanctions experts have told Reuters, is that the tanker's expensive cargo has been caught in a legal and political limbo created by international sanctions on Libya. Western governments seem happy for the rebels to sell their oil, and a few western companies may even be ready to buy it and ship it out. But the sanctions, which never anticipated the emergence of two Libyas, make that a dangerous gamble. The ship's fate illustrates the often blunt nature of sanctions regimes. Diplomats and international legal experts who design sanctions often talk about making them "smart" or "targeted," and say they can be used to hurt governments without hitting citizens. But in the case of a country divided, sorting friend from enemy can be next to impossible. Put simply, when Libya split in two, it created a contradiction between the West's political aims and the legal tools it was using to achieve them. The sanctions were designed to weaken Gaddafi. But the Equator shows they may be hurting the rebels more. And if western powers do turn a blind eye to rebel violations of the sanctions, that could undermine the credibility of the sanctions regime and the authority of the Security Council. It would also give Russia and China an excuse to do the same with Iran and North Korea. "There are some issues with the design of the targeted sanctions. It wasn't the best idea to impose an arms embargo on the entire country which technically prohibits support to the anti-Gaddafi forces. But the sanctions were brought in very quickly and the Security Council wasn't anticipating the stalemate and potential partition of the country," said Thomas Biersteker, professor of international security and conflict studies at the Graduate Institute in Geneva, who is an expert on UN sanctions. "These are policy instruments designed by committee. The outcome is that they are sometimes irrational in design because each one is the product of a political compromise." While the shipping industry puzzles over the legality of the shipment, western powers are also setting up a special fund to transfer cash to the rebels -- something they wouldn't have to do if they hadn't imposed sanctions in the first place. NO TAKERS? On its journey, the ship's destination seems to have changed. AIS data at one stage showed it was destined for Honolulu, indicating a possible U.S. buyer. But the final port changed in early May, prompting talk that its owners may have had second thoughts about the legality of the sale. The latest AIS shows the vessel is due in Singapore on May 18, probably to unload its oil at one of the city's many storage caverns from where it can be resold. One source familiar with the tanker's movements said the ship's cargo had already been sold and was on its way to Hawaii. But others said this was unlikely. While ships sometimes switch off their signal to avoid scrutiny or dupe ship-spotters -- including curious journalists -- the Equator has sent regular updates, with the exception of a few days. That's not enough time to travel to Hawaii and back. But it would be enough time to transfer the oil from one ship to another. A spokesman at the Honolulu harbor-master's office told Reuters a crude oil tanker was due on May 23 -- around the date the cargo could be expected to arrive from Singapore. Whatever the case, nobody will own up to buying the oil. China's big four state oil companies deny taking it. Vitol, the Swiss-based, publicity-shy oil trading firm that booked it, and the ship's owners, Greek-based Dynacom Tankers Management, are both declining official comment. By most accounts the cargo is now in limbo, and trade sources say Vitol has sold it on but it's not clear who owns it. "Even with east Libya, you could end up with a legal quagmire," said one oil trader formerly involved in buying Libyan oil for the Asian market, who asked not to be named because of company policy. REWARDS, FEAR

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